What Does a Credit Union Do?
When people get frustrated with banks, many of them move their money into credit unions instead. What does a credit union do? Essentially, it does all of the same things that a bank does. For daily financial transactions, bill payments, and direct deposits, credit unions function almost exactly like banks. There are few, if any, banking services that you couldn't also find at a credit union. On the other hand, there are several things that you'll find in a credit union that you won't find in any bank. Here are a few of those things.
Operating from a Membership Structure
People who use banks are called "customers" or "clients" because banks are businesses. Customers pay for their services through ATM fees, interest on loans, maintenance fees, and similar costs. Credit unions don't have clients or customers. Instead, they have members, and each member is a part owner.
When people start using a credit union, they must first pay a small (often minuscule) amount of money to buy into the system. With that money, the new member is essentially buying a share of the credit union.
Because credit union members are also owners, they get a lot of say in how the credit union is run. That's part of the reason credit unions serve such specific demographics. For instance, you might find a credit union just for people who live in your state.
Providing Member-Specific Services
Again, credit unions offer all of the usual financial services like savings and loans, but many also offer more specific services that fit their membership demographics' financial needs. Credit unions for young adults, for example, may offer especially low fees and resources for those who are learning about their financial options. Credit unions for small business owners, meanwhile, will often have specific loan options.
Serving Without Making a Profit
The other major factor that sets credit unions apart from banks is the fact that credit unions are nonprofit organizations. While credit unions can make money, they're required to invest that money right back into their own organizations. Members can benefit from this structure in a couple of ways. For one thing, those re-invested dollars can go toward programs that directly help members. For another thing, because credit unions aren't concerned with maximizing profits, members can enjoy good interest rates and low - if any - fees.
Getting Started With Credit Unions
Some people feel intimidated by credit unions and their membership requirements, but the truth is that it's easy to find a credit union that caters to your needs. Furthermore, obtaining membership is also a lot simpler than many people realize. You can start by taking a look at Bundlefi. We can help match you to a credit union that will work best for you.